Ready For Retirement

Deciding to work with a financial advisor is about more than how much you've stashed away. It's also about determining whether an advisor's benefits outweigh the costs. In your higher earning years, finances become more complex. More money means more decisions and more chances to make mistakes or miss out on opportunities. That's where a quality advisor can come in handy. They help you steer clear of bad investments, seize the right opportunities, and keep financial stress at bay.Having more than one perspective to draw from is the key to well-informed financial decisions. Teaming up and talking it out, whether with your partner or a financial advisor, is always beneficial.Questions answered:How can I determine whether working with a financial advisor is worth it for me?What factors should I consider when deciding if I need a financial advisor beyond just my age or income level?Timestamps:0:00 - Not an age-related decision2:43 - Value and pricing structure4:12 - Natural conflicts 7:24 - When benefit exceeds cost10:02 - Cost of mistakes12:18 - Cost of missed opportunities14:16 - Cost of anxiety 16:02 - Thought partnership21:36 - SummaryCreate Your Custom Strategy ⬇️ Get Started Here.Join the new Root Collective HERE!

Listener Ray is wondering what to do with his home as he embarks on a nomadic, van-life journey in retirement. Should he sell it to finance his travels or retain it for potential appreciation and cash flow? James explores the nuances of home ownership as an asset versus an investment. He considers cash flow and leverage as he looks at Ray’s three options – sell, rent, or borrow – while emphasizing aligning financial decisions with personal goals and aspirations.Questions Answered:Why shouldn’t I consider my home an investment?What are the key financial considerations for retirees when deciding whether to sell, rent them out, or explore other options?Timestamps:0:00 - Ray’s question1:56 - Why a home isn’t an investment4:38 - Do you want to be a landlord?8:22 - The financials10:14 - Asset appreciation11:30 - Cashflow15:04 - Leverage19:02 - What should Ray do?20:33 - Reverse mortgageCreate Your Custom Strategy ⬇️ Get Started Here.Join the new Root Collective HERE!

Listener Drew asks about a tax strategy for juggling capital gains and Roth conversions. While it can be a complicated question – especially when large accounts are involved – James provides some general guidelines that can be helpful for anyone with similar gnarly tax strategy challenges in retirement. In this episode, we’ll cover the extent to which required distributions will be an issue, what you need to alleviate that issue, and the timeframe within which you have to do that.James explains how to work backward to project your various tax brackets and determine how to prioritize tax gain harvesting, Roth conversions, and other tax strategies.Questions Answered: What is tax gain harvesting?What is the tax planning window and how do I use it to my advantage?Timestamps:0:00 - Drew’s question2:50 - Determine use for each asset5:59 - Tax gain harvesting11:10 - Back to Drew15:30 - James’ priorities for Drew18:41 - Usually not either/or20:07 - Working backwards24:50 - General principles29:50 - Tax planning window32:16 - SummaryCreate Your Custom Strategy ⬇️ Get Started Here.Join the new Root Collective HERE!

James responds to listener Jerry’s question about the optimal time to distribute inheritance or charitable gifts: before or after passing away. James walks listeners through four important things to consider when it comes to gifting and inheritance: your gifting goal, whether you have a strong desire to see the assets gifted within your lifetime, the tax implications of various types of gifts, and what to do with assets you plan to retain for now but are intended for future generations.Questions Answered: Should I give my children and grandchildren their inheritance before or after I die?What are the tax implications to my children when I gift them my assets?Timestamps:0:00 - Jerry’s question2:20 - What is your gifting goal?3:38 - Gift during your lifetime?6:51 - Timing and priorities9:17 - Different tax implications12:08 - Exemption amounts14:13 - Tax implications to child15:33 - Proper beneficiary designations21:41 - The right time horizon24:45 - SummaryCreate Your Custom Strategy ⬇️ Get Started Here.Join the new Root Collective HERE!

A listener says, “Eventually, one spouse will pass before the other, which will often catapult the survivor into a significantly higher tax bracket. Shouldn’t a Roth strategy take this into account?” James explores several factors that could positively and negatively impact a survivor’s tax liability and what to consider when creating a Roth conversion strategy. Questions Answered: How can Roth conversions benefit married couples beyond tax savings?What factors should be considered when determining the optimal strategy for Roth conversions to protect a surviving spouse?Timestamps:0:00 - Steve’s question3:40 - An example6:41 - 3 changes12:32 - Positive impacts15:22 - RMD calculations16:45 - Widows tax penalty19:46 - When to do Roth conversions23:40 - Big age gap28:45 - Start with a good reason29:57 - The bottom lineCreate Your Custom Strategy ⬇️ Get Started Here.Join the new Root Collective HERE!

Jason and his wife face a crucial decision: whether to purchase an annuity or pursue traditional investments as they prepare for a full-time, slow-travel retirement. With a diverse array of income sources, including pensions, 401k, property sales, and Social Security, they estimate their monthly expenses at $7,500. James analyzes their situation, emphasizing the balance between annuity stability and investment flexibility.He highlights the security of annuities and explains their limitations, guiding the couple towards a tailored approach that aligns with their goals and circumstances.Questions Answered:What are the pros and cons of annuities?How can I effectively balance the stability of annuities with the flexibility of traditional investments?Timestamps:0:00 - Jason’s question3:07 - Pros and cons of annuities6:32 - Assessing Jason’s situation9:52 - The role of Jason’s portfolio11:40 - Annuity alternatives13:23 - Support your retirement vision16:54 - Integrate financial plan and portfolioCreate Your Custom Strategy ⬇️ Get Started Here.Join the new Root Collective HERE!

The "Three Bucket Strategy" is a popular retirement income planning method. The first bucket covers immediate expenses in retirement. Listeners John and Donna are seeking advice on constructing their first bucket. With $1.6 million in assets and pension incomes, they aim to retire in 2026. James analyzes their needs, income sources, and portfolio and lays a foundation for their Bucket #1. It's crucial to bridge the gap between expenses and income, considering risk capacity and tolerance. Questions Answered: How do you divide assets into the three buckets, and what is the purpose of each?What role do risk capacity and risk tolerance play in determining portfolio allocation?Timestamps:0:00 - John and Donna3:36 - The bucket approach5:50 - Start with expenses8:53 - Non-portfolio income sources11:23 - Identify and bridge the gap13:06 - Assessing their portfolio14:53 - Portfolio dividend yield16:49 - Do you need Bucket 1?19:16 - What is the specific need?21:07 - Risk capacity23:22 - Test contingenciesCreate Your Custom Strategy ⬇️ Get Started Here.Join the new Root Collective HERE!

Benjamin, nearing retirement at 65, faces a familiar dilemma with his taxable account housing expensive mutual funds. Despite their underperformance, converting to low-cost index funds entails a significant tax hit due to long-held appreciable value. James explains weighing the immediate tax consequences against the risk of holding onto underperforming assets. He also provides a framework for assessing risk, identifying options, and making decisions based on personal financial goals.Questions Answered: How can you decide whether to sell underperforming mutual funds or continue holding onto them?  What factors should you consider in determining whether converting to low-cost index funds aligns with your financial goals and risk tolerance?Timestamps:0:00 - Listener question from Benjamin2:17 - Tail wagging dog?3:52 - Benjamin’s situation5:31 - WCS of selling vs not selling11:17 - Be careful about tax drag12:47 - Rethinking the break-even point14:11 - Consider your goal for the money17:17 - Identify the bigger risk19:26 - Make your decision20:26 - Will your tax situation change?24:20 - Consider staggering sales28:21 - SummaryCreate Your Custom Strategy ⬇️ Get Started Here.Join the new Root Collective HERE!

Typical retirement strategies assume a retirement age of over 60. With an earlier retirement goal, a careful look is required to determine what strategies will create the best outcome. James responds to a listener’s question about where to invest as he anticipates an early retirement. James walks through the steps of Root’s Sequoia System to explore options for early retirement scenarios.Questions Answered: How does early retirement impact traditional retirement planning strategies, such as the 4% rule?When deciding between retirement accounts (e.g., 401k) or brokerage accounts for pre-60 funds in early retirement, what factors should be considered?Timestamps:0:00 - Question about early retirement2:21 - Is early retirement possible?3:30 - Why the 4% rule doesn’t apply6:08 - Assessment of Juan’s situation8:11 - The Sequoia system Step 1 - purpose10:16 - Step 2 - retirement income12:49 - Relying on SS benefit?14:09 - Withdrawal strategy15:32 - Sourcing funds from age 50-5917:20 - Brokerage vs 401K20:22 - A part-time income scenario23:04 - Consider how expenses might change25:14 - Step 3 - investment planning28:09 - Steps 4 & 5- taxes and protectionCreate Your Custom Strategy ⬇️ Get Started Here.Join the new Root Collective HERE!

The 4% rule helps us understand how much we can safely take out of our portfolio each year without running out of money in retirement.Yet, as simple as the 4 percent rule seems, the practical implications are drastically misunderstood. I explore the three common mistakes people make when applying this rule and how to avoid them.Questions Answered:How do RMDs impact the 4 percent rule?Does the 4 percent rule account for changes in expenses and income sources?Timestamps:0:00 - Questions from listeners1:26 - Misconception 1 - RMD 3:27 - 4% rule applies to portfolio5:51 - Assumption of 30 years retirement7:51 - Misconception 2 - annuity distributions10:01 - An example 12:33 - Misconception 3 - static cash flow13:42 - Examples of changes17:44 - SummaryCreate Your Custom Strategy ⬇️ Get Started Here.Join the new Root Collective HERE!